Altisource Asset Management Corporation Reports Second Quarter 2020 Results; Announces Agreement to Terminate the Asset Manag...
August 14 2020 - 8:00AM
Altisource Asset Management Corporation (“AAMC” or the “Company”)
(NYSE American: AAMC) today announced financial and operating
results for the second quarter of 2020.
AAMC also announced that, on August 13, 2020, it entered into a
Termination and Transition Agreement (the “Termination Agreement”)
with Front Yard Residential Corporation (“Front Yard”), pursuant to
which, following a transition period of not more than 180 days to
ensure a smooth internalization and the transfer of certain
employees and assets to Front Yard, the Amended and Restated Asset
Management Agreement (the “Amended AMA”) with Front Yard will be
terminated. As consideration for the termination of the Amended
AMA, AAMC will receive (1) a termination fee of approximately $46.0
million, (2) $8.2 million for the transfer of certain assets and
subsidiaries of AAMC to Front Yard and (3) continued base
management fees through the date that Front Yard delivers written
notice to AAMC that the transition has been satisfactorily
completed. Of these amounts, AAMC will receive $18.2 million in
cash within 2 business days of entering into the Termination
Agreement and $36.0 million upon the successful completion of the
transition period under the Termination Agreement, of which up to
$21.0 million may be paid at the option of Front Yard in either
cash or Front Yard common stock. AAMC will retain certain assets,
key employees and subsidiaries to continue to build out its asset
management businesses focused on the origination and underwriting
of short duration construction loans backed by single-family rental
homes as well as other new business initiatives. As part of the
termination, AAMC has agreed to reinstate George Ellison and Robin
Lowe as Co-Chief Executive Officer and Chief Financial Officer,
respectively, of AAMC during the transition, and Mr. Ellison has
stepped down as Chairman of AAMC’s Board of Directors effective
immediately and agreed to resign from the Board of Directors and as
Co-Chief Executive Officer of AAMC shortly before the transition is
completed.
Second Quarter 2020 Highlights and
Recent Developments
- Increased Front Yard's rental revenues to $55.1 million for the
second quarter of 2020, up 1.5% over the first quarter of 2020 and
up 6.9% year on year.
- Managed continued improvement in Front Yard's operating
metrics, yielding its best yet quarterly operational results.
- Advised Front Yard in the sale of 30 non-core homes for a $0.3
million gain over carrying value.
- Negotiated the settlement by Front Yard, at the direction of
the board of directors of Front Yard, to terminate the previously
announced merger agreement with Amherst Residential, LLC
(“Amherst”), providing Front Yard with up to $100 million of
additional liquidity.
- Negotiated and executed the Termination Agreement with Front
Yard on terms resulting in payments to AAMC of over $54 million
plus management fees through the date that Front Yard delivers
written notice to AAMC that the transition has been satisfactorily
completed.
- Further developed new business opportunities for AAMC,
targeting market dislocation opportunities.
- Secured a firm, non-binding commitment of a $20.0 million
investment from a strategic investor for a fund formed by AAMC
focused on, among other things, the origination and underwriting of
short duration construction loans for the single-family rental
market.
“We are pleased by the continued improved and strong operational
performance of Front Yard in the second quarter under our
management,” stated Indroneel Chatterjee, Co-Chief Executive
Officer. “We also have made continued progress in the design,
development and organization of new business opportunities for
AAMC, as we are targeting market dislocation in real estate-backed
loans and fixed income bonds, mortgage-related securities,
government-sponsored mortgage and construction loans and mortgage
servicing rights. The Termination Agreement with Front Yard, which
is on terms favorable to both AAMC and Front Yard stockholders and
allows AAMC to reduce the operating costs associated with providing
services to Front Yard under the Amended AMA following the
transition period, and the $20.0 million firm investment commitment
in our new fund mark significant milestones for our company.”
Second Quarter 2020 Financial Results
AAMC’s net loss for the second quarter of 2020 was $7.8 million,
or $4.81 per diluted common share, which included a $(5.3) million
change in the fair value of its shares of Front Yard common stock,
compared to net income of $3.3 million, or $1.81 per diluted common
share, which included a $4.8 million change in the fair value of
its shares of Front Yard common stock, for the second quarter of
2019.
AAMC's net loss for the six months ended June 30, 2020 was $11.6
million, or $7.17 per diluted common share, which included a $(5.9)
million change in the fair value of its shares of Front Yard common
stock, compared to net income of $2.4 million, or $1.34 per diluted
common share, which included a $5.7 million change in the fair
value of its shares of Front Yard common stock, for the six months
ended June 30, 2019.
About AAMC
AAMC is an asset management company that provides portfolio
management and corporate governance services to investment
vehicles. Additional information is available at
www.altisourceamc.com.
Additional details on the Termination Agreement can be found in
the Company’s Current Report on Form 8-K that will be filed with
the Securities and Exchange Commission (the “SEC”) and, when
available, will be viewable on the SEC’s website (www.sec.gov).
Forward-looking Statements
This press release contains forward-looking statements that
involve a number of risks and uncertainties. Those forward-looking
statements include all statements that are not historical fact,
including statements about management’s beliefs and expectations.
Forward-looking statements are based on management’s beliefs as
well as assumptions made by and information currently available to
management. Because such statements are based on expectations as to
future economic performance and are not statements of historical
fact, actual results may differ materially from those projected.
The risks and uncertainties to which forward-looking statements are
subject include, but are not limited to: AAMC's ability to
implement its business strategy and the business strategy of Front
Yard; risks associated with the termination of AAMC's asset
management agreement with Front Yard, including the potential
effects that the termination can have on our new business
initiatives, results of operations and financial condition; AAMC’s
ability to successfully complete the transition period under the
Termination Agreement; AAMC's ability to retain key employees;
AAMC's ability to develop and implement new businesses or, to the
extent such businesses are developed, its ability to make them
successful or sustain the performance of any such businesses;
AAMC's ability to retain and maintain its strategic relationships;
AAMC's ability to obtain additional asset management clients; the
potential for the COVID-19 pandemic to adversely affect AAMC's
business, financial position, operations, business prospects,
customers, employees and third-party service providers; AAMC's
ability to effectively compete with its competitors; Front Yard's
ability to complete future or pending transactions, which could
affect AAMC's management fees; the failure of AAMC's service
providers to effectively perform their obligations under their
agreements with AAMC; AAMC's ability to integrate newly acquired
rental assets into Front Yard’s portfolio; AAMC's ability to
effectively manage the performance of Front Yard’s internal
property manager at the level and/or the cost that it anticipates;
developments in the litigations regarding AAMC's redemption
obligations under the Certificate of Designations of its Series A
Convertible Preferred Stock (the “Series A Shares”), including
AAMC's ability to obtain declaratory relief confirming that AAMC
was not obligated to redeem any of the Series A Shares on the March
15, 2020 redemption date since AAMC did not have funds legally
available to redeem all, but not less than all, of the Series A
Shares requested to be redeemed on that redemption date; AAMC's
failure to maintain Front Yard’s qualification as a REIT; general
economic and market conditions; governmental regulations, taxes and
policies and other risks and uncertainties detailed in the “Risk
Factors” and other sections described from time to time in the
Company’s current and future filings with the Securities and
Exchange Commission. The foregoing list of factors should not be
construed as exhaustive.
The statements made in this press release are current as of the
date of this press release only. The Company undertakes no
obligation to publicly update or revise any forward-looking
statements or any other information contained herein, whether as a
result of new information, future events or otherwise.
Altisource Asset Management
Corporation Condensed Consolidated Statements of
Operations (In thousands, except share and per
share amounts)(Unaudited)
|
Three months ended June 30, |
|
Six months ended June 30, |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
Revenues: |
|
|
|
|
|
|
|
Management fees from Front Yard |
$ |
3,584 |
|
|
|
$ |
3,556 |
|
|
|
$ |
7,168 |
|
|
|
$ |
7,102 |
|
|
Conversion fees from Front
Yard |
— |
|
|
|
— |
|
|
|
— |
|
|
|
29 |
|
|
Expense reimbursements from
Front Yard |
713 |
|
|
|
342 |
|
|
|
1,081 |
|
|
|
670 |
|
|
Total revenues |
4,297 |
|
|
|
3,898 |
|
|
|
8,249 |
|
|
|
7,801 |
|
|
Expenses: |
|
|
|
|
|
|
|
Salaries and employee
benefits |
4,826 |
|
|
|
4,238 |
|
|
|
9,370 |
|
|
|
8,656 |
|
|
Legal and professional
fees |
1,805 |
|
|
|
1,356 |
|
|
|
3,339 |
|
|
|
1,698 |
|
|
General and
administrative |
892 |
|
|
|
880 |
|
|
|
1,987 |
|
|
|
1,919 |
|
|
Total expenses |
7,523 |
|
|
|
6,474 |
|
|
|
14,696 |
|
|
|
12,273 |
|
|
Other (loss)
income: |
|
|
|
|
|
|
|
Change in fair value of Front
Yard common stock |
(5,279 |
) |
|
|
4,792 |
|
|
|
(5,913 |
) |
|
|
5,669 |
|
|
Dividend income on Front Yard
common stock |
— |
|
|
|
243 |
|
|
|
244 |
|
|
|
487 |
|
|
Other income |
17 |
|
|
|
49 |
|
|
|
54 |
|
|
|
53 |
|
|
Total other (loss) income |
(5,262 |
) |
|
|
5,084 |
|
|
|
(5,615 |
) |
|
|
6,209 |
|
|
Net (loss) income before
income taxes |
(8,488 |
) |
|
|
2,508 |
|
|
|
(12,062 |
) |
|
|
1,737 |
|
|
Income tax benefit |
(653 |
) |
|
|
(781 |
) |
|
|
(470 |
) |
|
|
(712 |
) |
|
Net (loss) income |
(7,835 |
) |
|
|
3,289 |
|
|
|
(11,592 |
) |
|
|
2,449 |
|
|
Amortization of preferred
stock issuance costs |
— |
|
|
|
(52 |
) |
|
|
(42 |
) |
|
|
(103 |
) |
|
Net (loss) income attributable to common stockholders |
$ |
(7,835 |
) |
|
|
$ |
3,237 |
|
|
|
$ |
(11,634 |
) |
|
|
$ |
2,346 |
|
|
|
|
|
|
|
|
|
|
(Loss) earnings per
share of common stock – basic: |
|
|
|
|
|
|
|
(Loss) earnings per basic
common share |
$ |
(4.81 |
) |
|
|
$ |
2.04 |
|
|
|
$ |
(7.17 |
) |
|
|
$ |
1.48 |
|
|
Weighted average common stock
outstanding – basic |
1,629,285 |
|
|
|
1,589,492 |
|
|
|
1,622,497 |
|
|
|
1,585,775 |
|
|
|
|
|
|
|
|
|
|
(Loss) earnings per
share of common stock – diluted: |
|
|
|
|
|
|
|
(Loss) earnings per diluted
common share |
$ |
(4.81 |
) |
|
|
$ |
1.81 |
|
|
|
$ |
(7.17 |
) |
|
|
$ |
1.34 |
|
|
Weighted average common stock
outstanding – diluted |
1,629,285 |
|
|
|
1,820,244 |
|
|
|
1,622,497 |
|
|
|
1,830,263 |
|
|
Altisource Asset Management
Corporation Condensed Consolidated Balance
Sheets (In thousands, except share and per share
amounts)
|
June 30, 2020 |
|
December 31, 2019 |
|
(unaudited) |
|
|
Current
assets: |
|
|
|
Cash and cash equivalents |
$ |
15,845 |
|
|
|
$ |
19,965 |
|
|
Short-term investments |
— |
|
|
|
517 |
|
|
Front Yard common stock, at
fair value |
14,133 |
|
|
|
20,046 |
|
|
Receivable from Front
Yard |
3,886 |
|
|
|
5,014 |
|
|
Prepaid expenses and other
assets |
2,328 |
|
|
|
1,609 |
|
|
Total current assets |
36,192 |
|
|
|
47,151 |
|
|
|
|
|
|
Non-current
assets: |
|
|
|
Right-of-use lease assets |
4,070 |
|
|
|
4,339 |
|
|
Other non-current assets |
1,980 |
|
|
|
1,758 |
|
|
Total non-current assets |
6,050 |
|
|
|
6,097 |
|
|
Total assets |
$ |
42,242 |
|
|
|
$ |
53,248 |
|
|
|
|
|
|
Current
liabilities: |
|
|
|
Accrued salaries and employee
benefits |
$ |
5,577 |
|
|
|
$ |
5,407 |
|
|
Accounts payable and accrued
liabilities |
1,380 |
|
|
|
1,328 |
|
|
Short-term lease
liabilities |
280 |
|
|
|
265 |
|
|
Total current liabilities |
7,237 |
|
|
|
7,000 |
|
|
Long-term lease
liabilities |
3,972 |
|
|
|
4,218 |
|
|
Total liabilities |
11,209 |
|
|
|
11,218 |
|
|
|
|
|
|
Commitments and
contingencies |
— |
|
|
|
— |
|
|
|
|
|
|
Redeemable preferred
stock: |
|
|
|
Preferred stock, $0.01 par
value, 250,000 shares issued and outstanding as of June 30,
2020 and December 31, 2019; redemption value $250,000 |
250,000 |
|
|
|
249,958 |
|
|
|
|
|
|
Stockholders'
deficit: |
|
|
|
Common stock, $0.01 par value,
5,000,000 authorized shares; 2,942,597 and 1,632,117 shares issued
and outstanding, respectively, as of June 30, 2020 and
2,897,177 and 1,598,512 shares issued and outstanding,
respectively, as of December 31, 2019 |
29 |
|
|
|
29 |
|
|
Additional paid-in
capital |
45,530 |
|
|
|
44,646 |
|
|
Retained earnings |
12,028 |
|
|
|
23,662 |
|
|
Accumulated other
comprehensive loss |
(126 |
) |
|
|
(33 |
) |
|
Treasury stock, at cost,
1,310,480 shares as of June 30, 2020 and 1,298,665 shares as
of December 31, 2019 |
(276,428 |
) |
|
|
(276,232 |
) |
|
Total stockholders' deficit |
(218,967 |
) |
|
|
(207,928 |
) |
|
Total liabilities and equity |
$ |
42,242 |
|
|
|
$ |
53,248 |
|
|
|
|
|
|
|
|
|
|
|
|
FOR FURTHER
INFORMATION CONTACT: |
Investor Relations |
T: +1-704-885-2461 |
E: IR@AltisourceAMC.com |
Altisource Asset Managem... (AMEX:AAMC)
Historical Stock Chart
From Aug 2024 to Sep 2024
Altisource Asset Managem... (AMEX:AAMC)
Historical Stock Chart
From Sep 2023 to Sep 2024